Finance Division of Wells Fargo to be shut down

After acquiring Wachovia Bank and taking heavy losses from subprime mortgages, Wells Fargo has announced that it could be shutting down its Finance Division. Wells Fargo plans on chopping 3,800 jobs from the Finance Division as a part of the sizing-down. Line of credit loans and other financial products will still be offered by Wells Fargo, but within the bank branches.

Source for this article: Wells Fargo to shut down Finance Division by Personal Money Store

What the Finance Division does

Wells Fargo Banking and Wells Fargo Financial have been two separate divisions for over 100 years. Financing for small cash loans, automobile financing, mortgages, and other large loans are handled through Wells Fargo Finance Division. With $ 24.7 billion in real estate loans within the Wells Fargo Finance Division, only $ 1.5 billion of them are "prime". The division lost about 4.62 percent of value in the first quarter, which is about on-level with other major lenders.

Wells Fargo takes over Wachovia

Wells Fargo began a merger with Wachovia in 2008. The merger added branches and liabilities to the Wells Fargo balance sheets. Considering that Wells Fargo and Wells Fargo Home Mortgage have a combined 8,800 branches, it's not a surprise that you will find "too many". The takeover of Wachovia was forced by government regulators, who wanted to ensure that Wachovia bank would not fail. As a separate entity, Wachovia was dissolved in March of 2010.

Lending at Wells Fargo will continue

The Wells Fargo bank branches will nevertheless be providing services for customers who are borrowing money. Inside Wells Fargo branches, fast personel loans and auto loan applications will nevertheless be offered as a part of the banking products. The business does nevertheless intend on offering mortgages, but rather than subprime offerings, FHA-backed loans will be the focus. Loans are less likely to default back to the bank when they're supported by the federal government. The current $ 14.7 billion in auto loans and $ 7.6 billion in unsecured personal loans will continue to be serviced by the company.